Narayana Murthy, co-founder of Infosys, shared his thoughts during the Nasscom Technology and Leadership Forum about the current state of the Indian start-up ecosystem. He pointed out that venture capitalists (VCs) are largely responsible for the current growth culture of Indian start-ups. He highlighted the fact that VCs are solely focused on generating higher returns on their investments, and they often push start-ups to prioritise growth over profitability.
This growth culture has resulted in start-ups continuously raising funds without any focus on generating revenue or building a sustainable business model. The risks associated with these start-ups are transferred to the next set of investors in the form of funding rounds, and this has created an unsustainable ecosystem that is similar to a Ponzi scheme.
Murthy’s comments have sparked a debate within the Indian start-up community on the need for a more sustainable approach to building start-ups. There is a growing realisation that profitability and sustainability should be the primary goals for any start-up, and that raising funds should be a means to achieve those goals rather than an end in itself.
Murthy’s views are significant because of his stature in the Indian business community and his previous role in building one of the country’s most successful IT companies. His comments have highlighted the need for the start-up ecosystem to focus on sustainable growth and profitability rather than just raising funds.